Average jobless claims continue down but data mask problems

In the week ending Jan. 9, the advance figure for seasonally adjusted initial claims was 444,000, an increase of 11,000 from the previous week’s revised figure of 433,000. The 4-week moving average was 440,750, a decrease of 9,000 from the previous week’s revised average of 449,750.

The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Jan. 2, a decrease of 0.1 percentage point from the prior week’s unrevised rate of 3.6 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Jan. 2 was 4,596,000, a decrease of 211,000 from the preceding week’s revised level of 4,807,000. The 4-week moving average was 4,855,000, a decrease of 151,500 from the preceding week’s revised average of 5,006,500.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.448 million.

The data are heavily affected by seasonal adjustments as over 801,000 people filed employment insurance claims last week, bringing actual continuing claims to almost 6 million. For the same week in 2009, there were 956,791 initial claims for unemployment insurance, which brought the insurance roles down to 5.65 million. Nevertheless, the trend for initial claims is down. The labor market is improving, albeit slowly.

However, what should be clear is that, despite the fall in initial claims, the jobs picture remains incredibly weak. Unadjusted continuing claims didn’t hit 6 million until February of last year and while they increased another 400,000 still, the week ended 14 March 2009 marked the high point for the series. What does that tell you? It tells me that the employment picture is still pretty dire in the U.S. And given the additional 5.0 million people claiming Emergency Unemployment Compensation, we now have a record 11 million people collecting unemployment insurance.

As David Rosenberg said when the jobs numbers were released last week:

The so-called ‘employment rate’ — the ratio of employment to population — fell 58.2% from 58.5% in November and the cycle peak of 63.4% in 2007. This is extremely significant because what it means is that it would take an expansion in employment of 20 million over the next five years just to get back to those old cycle highs. But here’s the problem — the country has never before managed to come close to creating that number of jobs over a half-decade period, so what the future holds is one of ongoing deflationary labour market pressure as far as the eye can see.

That’s why this is a only a technical rebound – and won’t be a full blown recovery for years to come (see my post on what I am calling a technical recovery). The structural issues will remain for some time to come.

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

Until there is actual job growth, how can you say “the labor market is improving?”

To me, logic says that getting worse less fast is different from improving.

If a patient’s cancer progresses more slowly than before due to chemo, that is very different from actual improvement. So it is with labor.

Further, looking at the household survey, Gallup’s poll of individuals (hiring/not hiring data), “jobs hard to get” surveys, and all the small business data, it is unclear to me that there is much slowing of the job losses except from the post-Lehman tsunami.

But, it’s not getting worse less fast. Getting worse less fast means we are losing more jobs at a slower rate (weekly jobless claims increasing by 25,000 instead of 50,000 in a given period). Now, we are losing fewer jobs on a weekly basis and are basically flat on a net basis.

Anonymous says 9 years ago

Ed-The employment situation is getting worse, at least as of December
(pending revisions). Fewer employed, smaller labor force. What is getting
better is initial claims for unemployment insurance, which is just a subset
of overall employment.